WTO decides this week on IT tariffs

The future of up to $US50 billion worth of trade in information technology equipment should be decided this Friday, when the World Trade Organisation is due to make a decison on ITA II, a proposed follow-up to 1996's Information Technology Agreement, which signed up 43 countries computers, into tariff reductions on telecom equipment, semiconductors, semiconductor manufacturing equipment, software and scientific equipment. And a New Zealander is at the helm.

The World Trade Organisation (WTO) is scheduled to make a decision Friday on tariff negotiations that could ultimately affect up to $US50 billion worth of trade in information technology equipment.

The decision involves ITA II, a proposed follow-up agreement to the WTO's Information Technology Agreement (ITA), which was signed at the end of 1996. Of WTO's 132 members, 43 signed the ITA agreeing to tariff reductions in six main product categories: computers, telecom equipment, semiconductors, semiconductor manufacturing equipment, software and scientific equipment. Together, the 43 signatories account for 93% of world trade in IT products, according to the WTO.

The ITA set up a four-step plan to eliminate customs duties and other duties on a long list of IT products over a space of four years, starting in 1997 and due to conclude by Jan. 1, 2000. The reductions were extended on a "most-favored-nation" status to WTO members, while Taiwan, Costa Rica, India, Indonesia, Korea, Malaysia and Thailand have been granted flexibility in cutting their tariffs to zero on a few products until after 2000, but not beyond 2005.

Having started in February this year, ITA II talks were aimed at expanding the list of products covered by the first ITA agreement, but those talks reached an impasse in July.

Then, on Sept. 30, ITA II Chairman Martin Harvey of New Zealand informed WTO members that ITA II consultations were ongoing among all 43 ITA signatories, according to Luis Ople, information officer at the WTO in Geneva. On Friday Oct. 23, the WTO will decide whether or not ITA II negotiations will resume, he said.

"In July when the members were supposed to reach an agreement, it was decided that the negotiations should not be pursued because of the differences between the participants," Ople said. "But consultations are ongoing now about whether to resume the ITA II negotiations."

Ople declined to comment on why the talks stalled or quantify the monetary value represented by a potential ITA II agreement, but some have pegged the value at US$50 billion [B], 10 percent of the value represented by the original ITA.

When the talks broke down three months ago, a U.S. Trade Representative (USTR) official told the News Service it was because of disagreements on tariffs covering printed circuit boards (PCBs), radar navigation equipment and "IT inputs," including computer components. Also, "the Asian countries, because of their current economic condition, were not able to devote (themselves) full time to the talks and we thought the issue was important enough to go back to later," the USTR official said.

Among the 400 proposed products for inclusion in ITA II are printed circuit board manufacturing equipment; flat panel display manufacturing equipment; capacitor manufacturing equipment; audio, radio, television and video apparatus; and telecommunications products, the WTO said.

"There are 14 participants who have proposed products to add to the agreement," said Ople at the WTO. "Each one wants their entire list to be added, while not being in full agreement with the lists from others."

An eventual schedule for eliminating the tariffs on products that might make the final list is not yet set. "The schedule is still the subject of another discussion," Ople said, adding that some members are asking that the tariffs for the ITA II products should not be eliminated until after 2000.

The WTO can be found on the World Wide Web at http://www.wto.org/.

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